WASDE: Meat Production Up on Bigger Calf Crop; Milk Down Despite Herd Expansion

LIVESTOCK, POULTRY, AND DAIRY: The 2015 forecast of total red meat and poultry production is higher than last month on increases to beef, pork, and poultry production. USDA’s Cattle report, released January 30, revised the 2014 calf crop higher and pointed to a higher level of cattle outside feedlots on January 1, 2015. Given greater supplies of cattle outside feedlots, placements are expected to decline less rapidly during 2015 with fed cattle slaughter higher than forecast last month. Cow slaughter is raised slightly from last month with larger cow numbers, but is still expected to be below 2014. The increase in slaughter is partly offset by slower growth in carcass weights. Pork production is raised as slaughter to date has been above expectations. Broiler production is higher as recent hatchery data shows faster-than-expected growth in chicks placed. Turkey production is also raised on hatchery data. Egg production is unchanged. Estimates of 2014 meat and egg production are adjusted to reflect December data.

The 2015 beef import forecast is raised from last month as demand for processing grade beef remains strong and strength of the dollar makes the United States an attractive market. Beef exports for 2015 are reduced due to relatively high U.S. prices. Pork exports are lowered based on increased competition from other exporters and slower growth in global demand. The broiler export forecast is lowered on weaker demand. Turkey exports are also reduced. The egg export forecast is raised. Meat and egg trade estimates for 2014 are updated based on data for December.

Larger meat supplies are expected to pressure prices for livestock and poultry. Cattle prices for 2015 are lowered from last month, reflecting recent price weakness for fed cattle and greater supplies of competing meats. The hog price forecast is down on greater supplies of market hogs and weaker-than-expected demand. Broiler and turkey prices are reduced on larger production. Egg prices are unchanged.

The milk production forecast for 2015 is lowered from last month as slower growth in output per cow more than offsets faster herd expansion. USDA’s Cattle report estimated dairy replacement heifers expected to calve during 2015 were up about 1 percent from a year ago, while the number of milk cows on January 1, 2015, was 1 percent above 2014 and the highest since 2009. Fat-basis exports for 2015 are unchanged from last month. Skim-solids exports are higher mostly on greater shipments of whey. Fat basis imports are higher on expectations of greater cheese imports during 2015. For 2014, production, output per cow, trade, price and stock estimates are adjusted based on published data through December.

Product price forecasts for butter and whey are higher, supported by strong demand and price strength to date. The nonfat dry milk (NDM) price is lower as strong competition in export markets is expected to persist during the first half of 2015. The cheese price is unchanged, but the range is narrowed. The Class III price is raised on higher whey prices. The Class IV price is down as a lower NDM price more than offsets a higher butter price. The all milk price is lowered to $17.40 to $18.10 per cwt.